Macy’s Inc (NYSE:M) recently reported its second quarter earnings and discussed the following topics in its earnings conference call.
Second Quarter Sales Trends
Paul Trussell – Deutsche Bank Research: Just a question about the cadence of the sales trends throughout the second quarter, was it weak right from the very start or softened more towards the end?
Karen M. Hoguet – CFO: No. It was weak throughout the quarter. May was impacted by the shift in the Friends & Family. So, it was a little bit hard to judge, but it was weak throughout the quarter.
Paul Trussell – Deutsche Bank Research: You mentioned that you are encouraged about the August sales to-date particularly on back-to-school categories. Could you give a little bit more color, specifically is the quarter-to-date trend within your 2.5% to 4% range?
Karen M. Hoguet – CFO: I can’t comment on the numbers for couple of weeks, but we are doing significantly better than we were doing in the second quarter in back-to-school, but frankly, across the country and across all categories. So, it really does feel like we’re on to a new trend, but again, two and half weeks does not make a season.
Paul Trussell – Deutsche Bank Research: Lastly, for me, you spoke about the marketing approach, the change we’re going to have in the second half. Could you just give a little bit more color on what we should expect? Are these sharper discounts across multiple categories and what should we – what difference should we see in your marketing and promotional cadence?
Karen M. Hoguet – CFO: Well, obviously being sensitive to not sharing data to our competitors. You know really what we are trying to do is communicate more broadly and be more clear and crisp in communication, in terms of how we are offering value, and we’re obviously also trying to be very sensitive to the fact that in this environment price matters. So, you know, but we are trying to do things in a balanced way, both in terms of brand marketing and also what we call demand. But it really is just stepping up – making our voice louder.
Second Half Outlook
Kimberly Greenberger – Morgan Stanley: I am wondering if you can just help us think about the second half of the year, and are there any on shift between Q3 and Q4 that we should be thinking about as we’re modeling out revenue, gross margin, SG&A. Just help us with the way to think about Q3 versus Q4, if you can?
Karen M. Hoguet – CFO: There aren’t any significant shifts between the quarters. There is lots of shifts between months within the quarters, but not a lot across the quarters.
Kimberly Greenberger – Morgan Stanley: So are you expecting a relatively consistent trend in both Q3 and Q4 if you look out to the back half of the year?
Karen M. Hoguet – CFO: Yes. But it is hard to forecast at this point. We will provide more insight as we get – at the end of the third quarter.
Kimberly Greenberger – Morgan Stanley: Then just lastly, if you could just help us think about inventory levels both at the end of – well particularly at the end of Q3, just given the change in the fiscal quarter end date that would be great?
Karen M. Hoguet – CFO: I think I will focus sort of on year end which is when the calendar fleshes out and it’s the same weeks. Q3 could be a similar situation as Q2, given when the fiscal calendar ends versus the regular calendar. But again our inventory at the end of the second quarter was actually below our plan. So we feel fine about the inventory levels.
Kimberly Greenberger – Morgan Stanley: Your outlook for year end on inventory?
Karen M. Hoguet – CFO: You know what, I don’t have that in front of me, but my guess is it’s keeping in what we would expect sales to be in 2014.